Transforming the World Bank Group

By: JClaude Germain, Ph.D.

June 2024

In the April issue of Global Perspectives, entitled "The IMF and the Economics Profession" (https://www.dhirubhai.net/pulse/new-critics-economics-profession-jclaude-germain-ph-d-jytye/?trackingid=1M3JvkQ9TCur6qF3k%2FBimv%3D%3D), I indicated that long-time critics of the prevailing methodological approach to economics and skeptics of the International Monetary Fund (IMF) should welcome the significant paradigm shift by such an influential and consequential intergovernmental organization. And I provided some reasons for such an exhortation. One of them was that this conversion might mean that the IMF's sister organization - the World Bank Group - might also follow suit if it has not yet already done so. The World Bank Group has recently issued a document entitled "The Knowledge Compact: Transforming Ideas into Development Impact". What is the Knowledge Compact about? What is its main goal? How does the WBG intend to achieve its goal? These are some of the questions that this article will address. But, first, what is the World Bank Group?

The World Bank Group

The World Bank Group (WBG), headquartered in Washington, D.C. United States, is a partnership of five global institutions "working for sustainable solutions to reduce poverty and build shared prosperity in developing countries". The five institutions are: (1) the International Bank for Reconstruction and Development (IBRD); (2) the International Development Association (IDA); (3) the International Finance Corporation (IFC); (4) the Multinational Investment Guarantee Agency (MIGA); and (5) the International Centre for Settlement of Investment Disputes. The first two (IBRD and IDA) together are known as the World Bank; and all five are collectively referred as the World Bank Group. That said, let us now turn to the Compact.

The Knowledge Compact

In the document "The Knowledge Compact: Transforming Ideas into Development Impact", the WBG acknowledges that "Today's global challenges are bigger, more complex, and more intertwined than ever before [and that] financing and investment alone cannot solve these problems". In order to tackle ongoing global issues - such as inequality, poverty, climate disasters, pandemics and conflicts, the WBG has decided to transform itself into a "knowledge bank". In this regard, the document states:

The Compact embraces a fresh mindset and charts a new path for the WBG to evolve into a 21st century knowledge bank [and] takes decisive step away from business as usual by redefining the WBG's approach to knowledge and strategically harnessing the power of knowledge for development.

What is the ultimate goal of the Compact?

According to the document, the Compact will establish a dynamic, collaborative, and technology-enabled ecosystem that enhances the WBG's leadership and impact at the country, regional and global levels. And the ultimate goal is "to take knowledge to a new level - placing it front and center of the WBG's work to end extreme poverty and boost shared prosperity on a livable planet (emphasis). By including " a livable planet", the WBG has embraced knowledge and climate as parts of its original mission of "ending extreme poverty and boost shared prosperity".

How does the WBG intend to transform itself into a "knowledge bank"?

The WBG plans to transform its approach to knowledge by Instituting a World Bank Group Academy, as part of its effort to become a "better bank [and] to meet the needs of its clients", meaning people living in the developing world. In this vein, a World Bank's Senior Managing Director stipulates "Our clients urgently need solutions today, not five years from now [and] we must move quickly and efficiently to ensure that knowledge and solutions to development challenges are in the hands of those who need them most".

The World Bank Group Academy

In its new vision of transforming ideas into development impact, the WBG has made knowledge a focal point of its mission by saying "now we are moving to become not just a funding mechanism but also a knowledge mechanism", which is in part the rationale for establishing the WBG Academy. It is crucial to address knowledge as a concept, but let us first consider the purpose of the Academy.

According to the WBG, the purpose of the Academy is to build the next generation of development leaders, policymakers and practitioners. More specifically, it states "The World Bank Group Academy aims to help build a cadre of development leaders and practitioners by training and helping them implement effective social and economic policies". That raises the following question:

Who will be eligible to participate?

The WBG states that eligibility criteria are established for each program and may require nomination by client countries or by invitation only and that select program activities will be open to staff of local think tanks, universities, bilateral and multilateral agencies, and non-governmental organizations (NGOs).

Nonetheless, it is clear that the Academy will be indirectly controlled ( or at least influenced) by governments because the WBG is an intergovernmental organization. Does that mean that the selection of the participants will be subjected to clientelism, influence peddling, nepotism, or patronage? That depends, Let us now focus on the notion of knowledge.

Knowledge

There is no universally agreed-upon definition of knowledge, but it is generally understood as information and skills acquired through experience and education. What is clear, however, is the existence of different types of knowledge, including a priori, a posteriori, empirical, propositional, non-propositional, mathematical, technological, and situated knowledge.

In the article "The IMF and the Economics Profession", I also indicated that a paradigm shift in the position of both - the IMF and the World Bank Group - might contribute to lower the decibel of "the tyranny of experts". Now that that the World Bank Group has decided to become a "knowledge bank", it is important that long-time critics of mainstream (orthodox) economics use this period of transition to at least express their viewpoints. At this stage, one way for them to participate is to raise a series of pertinent questions, including the following:

• What type of knowledge will the Academy infuse into the participants?
• Will the Academy take into consideration life experiences of people in the client countries to create new knowledge?
• Will the Academy perpetuate the myth that knowledge flows only from some selected countries in the North and just transfer it as is?
• Will the Academy advance Institutional Economics, an economic perspective that questions "the reliance on mathematical models which ignores the (non-economic) role of institutions such as the legal, political and social structure of an economy"?
• Will the Academy prepare participants as agents of change capable of making a difference in the countries they serve or as bureaucrats to maintain the status quo and expand their privileges?
• Will the technological training applicable to the client countries?
• Whose ideas will be transformed "into development impact"?

Conclusion - The purpose of the facts elucidated and questions raised in the article is not to pre-judge the Academy nor to question its raison d'etre, but in the hope that they be taken into consideration during the planning stage. Otherwise, people - including the critics - will face a fait accompli without any input from them (assuming that they are willing and able to participate). Doing so in advance might mitigate the tyranny of experts. I hope that the WBG Academy will use economics (including international economic development) as "a useful discipline to enhance human welfare rather than being a sterile discourse devoid of reality" and practical application.

I also hope that the Academy will contribute to build indigenous innovation capability in the client countries, and bear in mind this "inconvenient truth" expressed by Jayati Ghost (professor of economics at the University of Massachusetts): "the mainstream discipline is completely dominated by the North Atlantic - specifically the US and Europe - in terms of prestige, influence, and the ability to determine the content and direction of the discipline. The enormous knowledge, insights, and contributions to economic analysis that are made by economists in global majority countries [meaning the Global South] are largely ignored" (cited in "The IMF and the Economics Profession).